The nation's unemployment rate shot up to 8.5% in March as employers shed 663,000 jobs and cut workers' hours to a record low, the Labor Department said Friday in a report showing continued rapid deterioration in the job market.

Dark clouds continue to hang over the economy: The manufacturing sector shrank for the fourth consecutive month, construction spending has been falling for more than two years, future orders are down and prices are skyrocketing.

The unemployment rate leaps to a two-year high, record numbers of people are forced from their homes and Wall Street nose-dives again. Such is the fallout from a housing meltdown that threatens to slingshot the country into a recession.